BURBANK, Calif. — Three years ago Burbank Community Federal Credit Union rebranded itself as UMe Federal Credit Union. With a mobile-first product strategy, the $165 million CU has realized significant market gains, including a 30% jump in real estate lending.
"The fight for relevancy has to be constant and continuous," said UMe FCU President/CEO Robert Einstein. "We need to be agile and provide great experiences in all facets of our business."
Last month, Einstein participated in a webinar hosted by the Henderson, Nevada-based Bluepoint Solutions, an end-to-end payment processing and content management solutions firm. The purpose of the gathering, which included Callahan & Associates Industry Analyst Sam Taft, was to discuss challenges facing community financial institutions.
"In a relative short period of time, [UMe FCU] was able to significantly alter its course and go from a relative underperformer to a market outperformer," said Taft.
Callahan & Associates used a peer-to-peer software solution to study real estate loan ratios of California credit unions with assets from $100 million to $200 million as well as credit unions of the same asset class nationwide. UMe FCU emerged a front runner.
"Real estate loan penetration is the percentage of members that hold the real estate loan product with the credit union," said Taft. "The penetration rate with both the California and U.S peers has been flat or declining over the same period of time."
Taft explained that UMe FCU has grown its real estate loans outstanding ratio at a compound annual growth rate of 22.5%. In the fourth quarter of 2011, the outstanding real estate loans were just under $25 million. Three years later to the date that number spiked to $44.1 million.
UMe Credit Union VP of Marketing Anita Hutchinson, also present at the webinar, explained that the uptick in real estate loans is part and parcel to the overall branding strategy undertaken three years ago.
"Prior to [the rebrand] our membership growth had been flat for a decade," said Hutchinson. "Every month thereafter for the next three-plus years, we were up between 15 and 83 net new members per month, so it was very obvious that the brand was resonating."
What's The Secret To Loan Growth?
With 13,206 members, 30 employees and one branch, UMe FCU is up against formidable competition from larger CUs and banks. Among questions posed by webinar attendees was how the CU managed such a significant loan growth rate.
"While we have grown consumer loans too, the majority of our growth is real estate loans," said Einstein. "We focused on serving everyday people who have unique situations and problems. We go beyond what a traditional real estate lender will do."
With a "people-helping-people" motto, Einstein said the CU has worked with members that might have experienced a foreclosure or a bankruptcy or had financial challenges during the Great Recession. "Some people need second chances."
The CU doesn't offer 30-year fixed loans, requires a down payment of 20% or more and a member's income to debt ratio has to match CU requirements. "We are making sound financial decisions for the credit union," said Einstein.
Tech Forward
Remaining competitive requires adopting new technologies, which is often a challenge for a small credit union. "You need to prioritize where your investments are," said Einstein. "Member-facing technologies and beta security and protection have the highest priority."
Last year, UMe FCU, in conjunction with Bluepoint and Malauzai, successfully launched a mobile banking app that resulted in a 30% spike in mobile activity. To date, the CU has 6,817 online banking members with 2,964 using the mobile app.
During the webinar, Bluepoint Solutions Chief Marketing Officer Andrew Tilbury offered Accenture statistics showing that 94% of millennials — making up one-third of the U.S. population — are active users of online banking. He added that 72% are active with mobile banking and that 72% would likely bank with a non-financial services company. One reason for the latter is that 67% feel traditional and digital experiences from the financial institution are not always seamless.
"What gets you the win is being relevant and providing the products your members want and knowing what you value proposition is," said Einstein. "With technology changing, make sure you change with it — no matter what touch point a member is accessing you, you have to seek to provide a great experience, but winning is not easy."
In an effort to create an omni-channel banking experience for all members, Einstein said the credit union is in the process of adopting new technologies that will not only grow its loan portfolio, but its brand.
"This year we are working on an online banking conversion," he said. "We are continually enhancing our mobile platform and we are implementing remote document signing for loans and new accounts."
